Disability pensioners randomly selected as part of a program to check payment accuracy will not need to undergo medical reviews.
The auditor-general on Thursday released a report into the accuracy and timeliness of welfare payments by the Department of Social Services and Services Australia.
The department rejected a key recommendation of the audit, which suggested medical reviews could be used to test the eligibility of people receiving the disability support pension (DSP) to ensure the accuracy of $18.3 billion in payments.
"The department considers the requirement to conduct medical reviews to confirm eligibility as part of the Payment Accuracy Review Program would place an unreasonable additional burden on those disability support pension recipients randomly selected for review," it said in response to the audit.
The department said imposing tests would have an "inequitable impact" on some of the 765,000 DSP recipients.
"(It) would mean DSP recipients undergoing a Payment Accuracy Review Program review would require medical checks, thereby placing additional burdens on those randomly selected for review, when compared to the wider payment population," it said.
Services Australia delivered $124.7 billion in welfare payments on behalf of the department in 2021/22, representing about 20 per cent of all federal government spending.
The report found there were $8 billion worth of overpayments made in 2021/22, which amounted to 6.71 per cent of total payments.
The audit office estimated 81.4 per cent of welfare recipients were receiving correct payments.
The department and agency accepted 12 other recommendations for changes to improve the monitoring and reporting of payment accuracy and timeliness.
